WORLD TRADE  
ORGANIZATION  RESTRICTED  
 WT/COMTD/LDC/M/42  
1 Decemb er 2005  
 
 (05-5740 ) 
  Sub-Committee on Least -Developed Countries  
Forty -Second Session   
 
 
 
NOTE ON THE MEETING OF 29 SEPTEMBER 2005  
 
Chairperson:  Ambassador Ian de Jong (Netherlands)  
 
 
A. ADOPTION OF THE AGENDA  ................................ ................................ ................................ ........  1 
B. WTO  WORK PROGRAMME FOR LEAST -DEVELOPED COUNTRIES (LDC S) ................................ . 1 
(i) Market Access for Least -Developed Countries  ................................ ................................ ...........  1 
(ii) Accession of LDCs  ................................ ................................ ................................ ....................  14 
(iii) Trade -Related Technical As sistance and Capacity -Building Initiatives for LDCs  ...................  15 
C. OTHER BUSINESS  ................................ ................................ ................................ ......................  17 
 
 
A. ADOPTION OF THE AGENDA  
1. The Sub -Committee adopted the draft agenda contained in doc ument WT O/AIR/2659.  
B. WTO  WORK PROGRAMME FOR LEAST -DEVELOPED COUNTRIES (LDC S) 
2. The Chairman said that he would focus on three elements of the WTO Work Programme for 
LDCs (WT/COMTD/LDC/ 11), namely:  market access for LDCs;  accession of LDCs ;  and 
trade -relate d technical assistance  (TRTA)  and capacity -building initiatives for LDCs.  
(i) Market Access for Least -Developed Countries  
- Options for Least -Developed Countries to Improve their Competitiveness in the Textiles and 
Clothing  Business  (WT/COMTD/LDC/W/37)  
3. The Chairman  recalled that at the 41st Session the Secretariat had introduced its note entitled 
"Options for L east-Developed Countrie s to Improve their Competitiveness in the Textiles and 
Clothing Business" contained in document WT/COMTD/LDC/W/37.  He said th at while a 
preliminary but detailed discussion had taken place at that session, the LDCs had requested to keep 
the item on the agenda of today's meeting.  He said that a number of delegations had suggested hav ing 
a focused discussion on the specific sectio ns of the note, in view of its substantive content.  He also 
recalled the agreement  at the last session of the Sub -Committee to invite the International Monetary 
Fund (IMF ), the International Trade Cent re (ITC) and the World Bank to make presentations on t heir 
respective activities targeted to improve LDCs' competitiveness in the textiles and clothing business.  
Accordingly, these organizations had been invited to the  meeting.   
4. The representative of the IMF said that the role of his organizat ion in address ing the concerns 
relating to the textiles and  clothing sector of its m embers was guided by its mandate and main areas of 
responsibility, which included:  promoting international monetary cooperation;  facilitating the WT/COMTD/LDC/M/42  
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expansion and balanced growth of inter national trade;  promoting exchange stability;  assisting in the 
establishment of a multilateral system of payments;  and making its resources temporarily available to 
members experiencing balance -of-payments difficulties.  Accordingly, in contrast to the World Bank , 
the IMF did not address the sector -specific problems and difficulties of its members .  It rather focused 
on the broader macroeconomic framework to promote macroeconomic stability and prevent crises;  to 
help resolve balance -of-payments crises w hen they do occur;  and to promote growth and alleviate 
poverty.  It relied on three main functions for meeting these objectives , namely surveillance, technical 
assistance, and lending.  He underlined that each of these functions had a potential bearing on  
improving LDC s' competitiveness in the textiles and clothing business.  He then elabora ted each of 
these functions one  by one.  
5. He sa id that the IMF conduct ed regular dialogue  with,  and provided policy advice  to, its 
Members through its surveillance  funct ion.  The IMF prepar ed an in -depth appraisal of each member 
country’s economic situation once a year, including areas of vulnerability and sources of 
macroeconomic risks.  It had regular discussions with the member country’s authorities to promote 
policies  that were most conducive to stable exchange rates and to a growing and prosperous economy.  
Since the termination  of the A greement on Textiles and Clothing (ATC) , and prior to that , the IMF 
had paid particular attention to developments in the textiles and  clothing sector in its bilateral 
surveillance activities in s elected Members , including in -depth analysis of ways to improve 
performance of the sector.  The IMF's analytical work had been particularly geared towards assessing 
the likely impact of the ATC’ s termination on balance -of-payments, designing a suitable 
macroeconomic program me to assist the members  affected, and monitoring the situation.  The 
analysis had typically involved an assessment of a country’s vulnerability to balance -of-payments 
problems  and identification of Members  that were most vulnerable , which included Members with 
relatively large texti le and clothing exports to quota -constrained markets.  As infrastructure, policies, 
human capital, regulations and corruption had tended to limit th e capaci ty of the LDCs to react to the 
post-ATC environment, the IMF staff recommendations had aimed at improving the overall business 
climate in the LDCs with a view to facilitating the development of export activities.  He further said 
that the IMF offer ed technical assistance and training to help its member countries strengthen their 
capacity to design and implement effective policies.  Technical assistance was offered in several 
areas, which included :  fiscal policy ;  monetary and exchange rate policies ;  banking and financial 
system supervision and regulation ;  and statistics.  He added that the most relevant areas of technical 
assistance to the textiles and clothing sector involved assistance for data improvements, customs 
reform, tax and tariff reform . 
6. He continued by saying that financial assistance was one of the  main function s of the IMF 
that might be relevant to improve LDC s' competitiveness in the textiles and clothing business.  
Financial assistance was available to member countries to create a  breathing space need ed to correct 
balance -of-payments problems, including problems stem ming  from adverse developments in the 
textiles and clothing sector .  The IMF had introduced the Trade Integ ration Mechanism (TIM) in 
April  2004  to deal specifically with  balance -of-payments shortfalls that might result from multilateral 
trade liberalization, including the expiry of the ATC.  The TIM was designed to help stabilize 
temporary balance -of-payments problems that might arise from implementation of trade policy 
measures by other Members  that result ed in more open and non -discriminatory market access for 
goods and services.  Examples included:  (i) the erosion of tariff preferences in export markets;  
(ii) increases in the price of food imports that might result fr om cuts in agricultural subsidies in OECD 
countries;  and (iii)  higher imports and/or lower exports from increased competition in textiles and 
clothing markets resulting from the expiry of the ATC.  In the light of concerns expressed by some 
African Member s, the IMF had been looking at the option of softening the criteria for TIM 
qualification to inclu de the expiry of the A frican Growth and Opportunity Act (AGOA)  third -country 
provision in 2006 and 2007 , which could be seen  as a possible “liberalizing event ”.  He underlined 
that the IMF research suggested that balance -of-paymen ts shortfalls stemming from TIM -qualifying 
trade policy shocks were unlikely to be large for most Members  and would eventually be dominated  WT/COMTD/LDC/M/42  
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by the positive impact of more open trade.  He said that two Members had  availed themselves of the 
TIM, namely Bangladesh  in July  2004 in the context of a P overty Reduction and Growth Facility 
(PRGF)  arrangement , and the Dominican Republic in January  2005 in the context of a s tand-by 
arrangement.  H e said that adjustment pressures had been less severe than anticipated in a number of 
Members  reducing the need for support under the TIM.  That might be owing partly to a lessening of 
competitive pr essures due to the effective re -imposition of restraints on textiles and clothing imports 
from China .  In conclusion, he emphasized that the IMF would continue to help its member countries, 
especially the L DCs, in their adjustment to the post -ATC global environment.  To that end, the IMF 
would continue to provid e policy advice, technical assistance, and financial support to help the LDCs 
develop strategies and policies to make their economies more competitive.   
7. The representative of the ITC said that the global textiles and clothing trade was nearly 
US$400  billion, and clothing represented half of that trade.  The t extiles and clothing sector accounted 
for 7  per cent of global merchandise trade and 14 per cent of global employment.  The share of LDCs 
in the  world clothing trade was 5  per cent.  He underlined that  most LDCs did not have an integrated 
textiles and clothing industry , and that their clothing exports were eight times higher than their textile 
exports.  The note by the WTO Secretariat looked at three major factors namely TRTA and 
capacity -building  initiatives , non -reciprocal preference schemes and other means including policies 
and trade facilitation.  His organization had identified three areas of importance that LDCs would be 
required to focus on in the post -ATC period, which were:  (i) enterprise comp etitiveness;  (ii) trade 
policy;  and (iii)  trade facilitation.  The primary mandate of his organization had been  trade 
promotion .  In this regard , the ITC had been working directly with the business sector .  He said that 
the TRTA  by the ITC  was demand -driven based on funds from donors.   
8. He continued by saying that the textiles and clothing industry had bee n taking the shape of a 
service -oriented industry.  Under the quota system, manufacturing garments had been the principal 
occupation by the firms.  Howe ver, buyers now were requesting additional services such as material 
sourcing, product development, and design development.  LDCs  had lacked advantage s in these areas  
of services.  He then outlined areas where the ITC had been working in developing countr ies, 
particularly in the LDCs.   
9. First, he said that the note underlined the need to identify the most binding constraints and the 
need to develop own sector strategies for the LDCs reflecting latest developments.  In response to 
that, the ITC had been assi sting developing countries and the LDCs in developing their own clothing 
sector strategy and helping them to analyze the value chain.  In that regard, the ITC had been bringing 
all stakeholders together with a view to overcoming pro blems all along the valu e chain.  This 
structured thinking process had been applied in Botswana and Malawi.  Under national sectoral 
strategy approaches, this meth od had also been applied in Lao P.D.R  and in Cambodia.  
10. Second, he said that the ITC contributed  to the  understand ing of changing m arkets and  to 
developing supply -side capacity.  The note underscored the  need to develop capabilities so as to build 
export industries.  He emphasized that t he clothing industry in LDCs should move up beyond simple 
assembly.  The ITC had been  working on product and market development in the last forty years , and 
had been helping the LDCs in the areas of  market as well as product diversification .  Market 
diversification was important for LDCs.  Equally important was product diversification.   The LDCs 
needed to identify new opportunities such as developing new products and exploring new markets.  
He said that a  number of workshops had been held on the implications of the quota phase -out in close 
cooperation with the WTO Secretariat.  An ITC websi te had been developed particularly geared 
towards the business community that provided information relating to the textiles and clothing sector, 
such as busi ness information, data analysis and  technical assistance approach of the ITC . 
11. Third, he underlined that developing country markets had potential for LDC clothing exports.  
The ITC had  a South-South trade development program, specifically  targeting the area of  the textiles 
and clothing sector .  The program me had three pillars.  Under the first pillar, th e ITC was in the WT/COMTD/LDC/M/42  
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process of developing a new publication to enable LDCs to understand how to penetrate fast-growing 
developing country markets.  Under the second pillar, ITC was exploring regional potential to exploit 
traditional market s.  Since the LDCs d id not have vertical integration in the textiles and clothing 
industry, materials could be sourced regionally to make a virtual vertical i ndustry.  In th at regard, 
South-South trade of intermediaries such as trade of fabrics and trim mings  could be promoted .  The 
final product could still be sold to traditional major market s.  Regional sourcing of materials and 
accessories w as possible under the Central American Free Trade Agreement (CA FTA).  That might 
be re plicated in regional arrangements such as the South Asian Association for Regional Cooperation 
(SAARC), the Association of South east Asian Nations (ASEAN), the Southern African Development 
Community (SADC) and  the Common Market for Eastern and Southern Africa (C OMESA ).  Under 
the third pillar , ITC facilit ated technical cooperation among developing countries  (TCDC) .  The 
Foreign Direct Investment (FDI) into LDCs was  not producing much transfer of know -how.  In this 
regard, it was important to develop regional or national training institute s together with fo reign 
investors  and ITC had been developing projects  to that effect .  He said that the l arge textiles and 
clothing industry countries in Asia had been  willing to provide technical assistance to the African 
LDCs.  ITC had been discussing with these countrie s to facilitate technical assistance for developing 
countr y Members , in particular for the LDCs.  
12. Fourth, ITC gave assistance in the area of material sourcing .  The note showed that LDCs had 
a comparative advantage in the production of clothing and emphasiz ed that lack of domestic input 
would not  necessarily translate into disadvantage s as long as inputs could be imported at world prices.  
That, according to him , was a necessary condition but not a sufficient one.  He added that the enabling 
environment shou ld be right and that enterprises needed to have the skills to undertake material 
sourcing.  Material sourcing was incre asingly becoming important.  He gave an example of the cost 
structure of a  woven shirt for a  typical manufacturer from Bangladesh , and sh owed that a reduction in 
the supply cost of fabric s and trimmings could increase the gross profits of a manufacturer.  He said 
that the cost structure of a woven shirt comprised the following:   59 per cent of the cost accounted for  
fabric imported from a t hird country ;  16 per cent accounted for trimmings (bu ttons, threads, label s, 
etc);  7 per cent accounted for cut & make (labour);   8 per cent represented  overhead ;  and 10  per cent 
accounted for  the profit.  He said that the traditional way to improve  competitiveness would imply 
improving on cut and make , which accounted for only 7 per cent of the cost .  Rather, t he 
manufacturers needed to look at the elements which represented 75 per cent of cost .  Translating the 
same figure in terms of one dollar reveal ed that if there were a reduction of  10 per cent in the supply 
cost of fabric s and trimmings, there would have been an increase in gross profit of 60 per cent.  He 
said that t he ITC had a new publication on fabric and material sourcing and had been providi ng 
training to help enterprises and local institutions develop necessary skills in this regard.   
13. Fifth, the ITC had been working in the area of information technology.  The note said that 
access to information technology would strengthen LDCs' textiles an d clothing competitiveness.  In 
that area, the ITC had  produced a business guide on e -applications in the textiles and clothing sector, 
which looked at new requirements from international buyers.  The guide contained overvie ws of 
technology developments, e -requirements imposed by the buyers and trading houses of Hong Kong, 
China , European Communities, Singapore  and the United States.  It also contained case studies of 
developing countries including how they had successfully responded to such new requirement s.  A 
diagnostic software -based benchmarking tool developed  by ITC called "FiT" Benchmarking tool had 
allowed companies to evaluate their performance s in various markets.  
14. He summarized his presentation by stating that ITC had been engaged with Members  to 
develop sector strateg ies based on value chain analysis .  ITC had been assist ing companies in the area 
of diversification through tailor -made pr ojects , and had been undertaking workshops to promote 
exports.  It had developed the "Source -It" Global Material Sourcing guide, business guide on  
e-applications  and the "FiT" benchmarking tool a s well as  training and information dissemination 
activities.   He underscored that the ITC had been working at the micro and meso level and had a 
specific niche to assist the business community .  The i dentified areas of technical assistance had been  WT/COMTD/LDC/M/42  
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developed on a modular basis but could be implemented as a programme.  He pointed out that LDCs 
had not sought  technical assistance from them.  He added that d onors seemed to be rel uctant to 
finance textiles and clothing projects.  In conclusion, he said that small project components in the 
textiles and clothing area were underway in Bangladesh, Cambodia, Lao P .D.R and Malawi . 
15. The representative of the World Bank  expressed appreciati on for the work done by the 
secretariat resulting in the note that was presented at t he previous meeting of th e Sub-Committee.  He 
said that the expiry of the ATC on 1 January  2005 marked an important achievement of the 
multilateral trading system.  The ph ase-out of textile quotas had led to a more competitive 
environment .  Members that had been deriv ing their competitiveness from quotas were being affected 
by the increased exposure to market forces.  Following the expiry of the ATC, Members  such as 
China a nd India , that had a competitive textiles and clothing sector , had experienced a significant 
growth of their exports to key markets, for example to the U nited States and the E uropean 
Communities  in the first half of the year .  Some less efficient producers  had been losing out.  He 
mentioned that some of the Members  that were expected to be most vulnerable namely Bangladesh 
and Cambodia, appeared to be coping well in the first half of the year compared to the first half of 
2004.  On the other hand , Members  like Lesotho, Maldives  and Nepal had experienced a significant 
loss of exports.  It was against this background that the World Bank had been focus ing its assistance 
particularly on improving efficiency of the textiles and clothing sector.  I ssues of infrast ructure like 
trade facilitation , which was fundamental for the competitiveness of the textiles and clothing sector , 
had also been addressed . 
16. He said that the approach to competitiveness by the World Bank focused on streamlining 
regulatory processes, improv ing business infrastructure and standard trade facilitation efforts such as 
customs reform.  Each Members  faced a different set of opportunities and constraints .  The World 
Bank 's country level program mes responded to these by reflecting the priorities of the clients in the 
context of the Poverty Reduction Strategy (PRS) approach.  There had been  a number of activities 
both at the analytical level and at the level of projects that were relevant to the textiles and clothing 
sector in the LDCs.  In the 14 LDC s where the textiles and clothing sector played a substantial 
economic role, as identified in the note, the World Bank had projects  adding up to more tha n 
US$1  billion.  He said that all such projects had been listed in the appendix of the presentation 
submitted at the meeting.  The International F inance Corporation  (IFC) , the private -sector “arm” of 
the World Bank Group, had also done substantive analytical work and had investments in the textiles 
and clothing sector  in the LDCs.   
17. He continued by addressi ng the following issues:   (i) how business environment 
improvements in the LDCs might directly or indirectly benefit the ir textiles and clothing sectors;  
(ii) examples of the World Bank activities that had contributed to the competitiveness of the textile s 
and clothing sector in relevant Members ;  and ( iii) World Bank/IFC analytical work and projects 
related to the textiles and clothing sector.  As regards business environment, he said that in 
sub-Saharan Africa, on average, a firm had to obtain 18 signatu res involving 48 days  to complete an 
export procedure.  The  corresponding numbers for high -income countries were  respectively  3 
signatures  and 12 days .  As markets for textiles and clothing products were becoming increasingly 
time-sensitive, each day in tr ansport delay added to the  cost of the  products.  Inefficient customs a lso 
forced buyers to keep large  stocks in their warehouses and added to the uncertainty of the delivery.  
He underscored that streamlining of regulatory processes and trade facilitation  measures such as 
simplified customs procedures would benefit all tradable sectors, including the textiles and clothing 
sector .  That was one of the area s where  the World Bank had been putting emphasis in the context of 
the trade facilitation negotiations in the WTO.  With respect to the LDCs, the World Bank projects 
were funded either by credits or grants from the International Development Association (IDA) .  He 
informed Members that the shareholders of the World Bank had decided to fund projects by grants  in 
the LDCs.  In the 14 LDCs reviewed, the World Bank had 34 ongoing, proposed or completed 
projects.   The total relevant IDA credits and grants amounted  to more than US$1  billion .  There had 
also been a great deal of analytical work in close cooperation with the ITC, IMF, UNCTAD, UNDP WT/COMTD/LDC/M/42  
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and the WTO in the context of the I ntegrated Framework (IF) .  He then elaborated on the World 
Bank's activities in three Members , which had been receiving special attention because of potential 
vulnerability to major changes  in markets.  Those countries were Bangladesh, Cambodia and Lesotho.   
18. He said that in response to the ATC phase -out, Bangladesh had been emphasizing the need to 
meet the challenges of globalization by improving the competitiveness of the private sector .  Over the 
last few years, textiles and clothing exports had grown to account for almost 80  per cent  of 
Bangladesh’s total exports.  The World Bank in close cooperation with the Government had 
implemented a comprehensive study entitled  “End of MFA:  Strateg ic Options for the Readymade 
Garment Industry” .  The study was being finalized.  The World Bank had also been developing a 
“Private Sector Development Support Project ” based on an IDA credit of US$70  million.  Some 
constraints had been identified in doing business in Bangladesh.  These included:   inadequate energy 
supply ;  cumbersome regulatory and administrative procedure ;  difficulties in obta ining land ;  and 
poor access to long -term finance.  The World Bank project s were being designed to address some of  
those challenges.  Turning to Cambodia, he said that th is country  had grown to be one of the top 20 
garment exporters to the United States.   The growth of the textiles and clothing sector in Cambodia 
had begun under the quota system, and comprised 80  per cent of its exports  before the expiry of the 
ATC .  In close cooperation with the U nited States, Cambodia had put emphasis on the improvement 
of labo ur standards in an effort to differentiate its products.  Following the expiry of the ATC, 
Cambodia had requested the assistance of the Foreign Investment  Advisory Service (FIAS) to 
re-design its labour stan dards system .  In order to improve the sustainability of the garment sector, the 
FIAS had also been involved in reforming the existing monitoring and reporti ng system t o respond to 
international best  practices and had been focusing on activities that would meet the information needs 
of the textiles and clothing industry’s inter national buyers.  In April  2005, FIAS had finalized an 
analytical work entitled "Cam bodia - Corporate Responsibility in the Apparel Sector and Potential 
Implications for Other Industry Sectors ."  By focusing on labour standard enhancements, Cambodia 
had targeted  international buyers in highly competitive markets.  The World Bank had also been 
preparing the "Cambodia Trade Facilitation and Competitiveness Project ", with an IDA grant of 
$10 million .  The project would start by the end of this year.  Th e project was aimed at supporting 
Cambodia’s strategy to promote economic growth by reducin g the transaction costs that were related 
to trade and investment, improve the transparency of the investment processes and facilitate the access 
of domestic producers to export markets.  
19. He continued by saying t hat the World Bank had been involved in other  relevant analytical 
work, much  of which was done in close cooperation with other agencies in the context of the IF, 
through Diagnostic Trade Integration Studies (DTISs).  The DTISs reflected the priority each 
beneficiary  attached to particular sectors.  H e said that 14 LDCs had completed and validated their 
DTISs and five of these had chosen to include focused analyses of the textiles and clothing sector 
namely Cambodia, Lesotho, Malawi, Nepal and Senegal .  For instance, the DTIS of Lesotho  had been  
comple ted in 2003.  It found that the major obstacles to further development of the textiles and 
clothing industry included:  inadequate and u nreliable supply of electricity ;  telecommunications and 
water to the industrial estates;  limited availability of servi ces on industrial land ;  and the limited 
handling capacity of the roads and railways.  A number of World Bank projects were being 
implemented dealing with those challenges.  For instance, the "Utilities Sector Reform Project " was 
expec ted to be completed i n December  2006.  The "Water Sector Improvement Project " was approved 
in October  2004.  Other projects in the pipeline included "Integrated Transportation Project " and a 
"Private  Sector Competitiveness Project".   All these projects, although not directly  focused on the 
textiles and clothing sector,  had been respond ing to the overall infrastructure challenges faced by 
Lesotho.  
20. He continued by saying that a common thread  that had emerged in the review of trade policies 
in the LDCs was the importance of remo ving c onstraints that created an anti -export bias.  Many LDCs 
applied high  import duties to products, for example yarns, fabrics and sewing needles, that were  key 
inputs for the textiles and clothing industry.  Th at, in turn, eroded the competitiveness of local firms  WT/COMTD/LDC/M/42  
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that ha d to pay higher prices for these inputs.  And even in those cases where drawback schemes were 
available to reimburse exporters, poor implementation of the mechanism often added to the cost of 
doing business in the LDCs.  Therefore, one o f the important areas for improving competitiveness of 
the textiles and clothing sector was associated with the trade policies of the LDCs.  In conclusion, he 
said that the expiry of the discriminatory quantitative restrictions on textiles and clothing had  
unmasked the inefficiencies of the sector in Members  that formerly relied on quotas.  The World Bank 
Group had a large portfolio of projects and activities that had been address ing the overall challenges 
in the LDCs , including in the policy environment as  well as the private sector .  At the request of 
Members , the World Bank would be ready to discuss particular financing needs related to the 
post-ATC adjustment.  Such discussions should take place within the framework of the Country 
Assistance Strategies a nd Poverty Reduction Strategies.  He looked forward to continuing the 
dialogue on how the World Bank might further contribute to improving the LDCs ' ability to face the 
competitive challenges of the post -ATC environment.  
21. The representative of Zambia , on be half of the LDCs, thanked the IMF, ITC and the World 
Bank for their participation .  He said that t he LDC delegations  had become more aware of their 
programmes.  He appreciated the work and effort of the ITC to assist LDCs to improve their 
competitiveness in the textiles and clothing sector , which had been an important industry for LDCs.  
Direct involvement with enterprises had given the ITC a more hands -on practicability.  He 
appreciated the programmes and projects of the World Bank and the IMF.  He noted t heir limitations 
to deliver concretely in improving competitiveness in the LDCs' textiles and clothing sector.  While 
the IMF would take care of balance -of-payments difficulties, the World Bank was responsible for 
broader infrastructure development and its assistance was not sector -specific.  The note by the 
Secretariat showed that both the World Bank and the IMF had not developed  a global strategy to 
address post -ATC adjustment problems in LDCs.  He sought information from the World Ba nk and 
the IMF on whe ther trade -related needs were being integrated or prioritized in their country 
programmes since these institutions operate at the country level and had a framework of cooperation 
in that regard.  He said that analytical studies, advisory services as well a s assistance in developing 
strategies were necessary conditions to reposition industries in a changing global environment.  He 
appreciated that a number of studies had been undertaken to assess the impact of the termination of 
the ATC.  He wondered who wou ld implement findings or recommendations coming out from such 
studies.  Few organizations had the competence needed  to enable LDCs to tap into opportunities 
emerging from the liberalization of the textiles and clothing trade.  In that regard, he believed t hat 
development partners might play a critical role.  He underline d that the LDCs required sector -specific 
or industry -specific support to boost their clothing exports .   
22. He continued by express ing the inte rest of the LDCs  to have an in -depth discussion on  the 
non-reciprocal preference schemes section of the note.  Preference schemes provided LDCs important 
market access.  He said that the note was elaborate in this section and had raised a number of issues.  
It would be useful for LDCs to listen to the pre ference -granting Members, especially Canada, the 
European Communities, Japan, and United States on how they considered improving  their schemes 
for LDCs as  a majority of LDCs' textiles and clothing exports were destined  to their markets.   He wa s 
aware that the European Communities  had been working on reforms of its rules of origin and that the 
United States had been reflecting on the coverage of its preference schemes.  He said that often lack 
of information to authorities in LDCs could not enable them to ta ke advantage of preference schemes 
or of the improvements made therein.  He requested the Chairman to keep the item on the agenda of 
the next meetin g to discuss the non -reciprocal preference schemes section of the note.  
23. The representative of Uganda  endorse d the statement made by Zambia, on behalf of the 
LDCs.  He said that one of the major problems that the LDCs had been facing was their lack of 
diversification , which was also reiterated in the presentations .  It was due to lack of a diversified 
export bas e that the problems in the post -ATC period were severe for LDCs.  LDCs had been 
exporting in few product lines even under AGOA.  He hoped that the progr ammes of the World Bank , 
the IMF and ITC as well as the IF would contribute to  the diversification of the LDCs ' export base.  WT/COMTD/LDC/M/42  
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He underlined that t here had been lack of resources in LDCs for investment in major  industries.  Most 
of the LDCs under AGOA, and otherwise, had been outsourcing fabrics and other raw materials.  Th at 
trend might not be sustainable in  future.  He welcomed the point made by the World Bank that trade 
facilitation was one of the area s affecting the competitiveness of the LDCs ' textiles and clothing 
exports .  Comparative advantage in LDCs was eroded because of a lack of trade facilitation measures .  
He said that often 50 per cent of the cost of a product was due to transportation cost.  For LDCs, 
particularly for land -locked LDCs, trade facilitation measures were vital not only for the textiles 
sector but in other sectors as well.  He empha sized the importance of policies to facilitate internal 
mobility of products.  He also stressed the importance of improving domestic competitiveness to face 
competition at the  international level.  He requested that the issues he raised would be further 
examined.   
24. The representative of Bangladesh  said that his delegation had been following the programmes 
of the IMF, ITC and the World Bank very closely .  They were important institutions for LDCs.  His 
delegation had been engaging in a dialogue with these in stitutions so as to understand their analyses 
of situation in LDCs.  He said that unless the analyses were accurate, the policy recommendations that 
could be drawn might be misleading.  Trade-related capacity building had been increasing in recent 
times.  He welcomed the fact that institutions that had not participated in such programmes before had 
now com e forward.   The ITC's presentation contained practical information.  The ITC had strong 
links with the private sector.  His delegation  would continue to support that process.  H is authorities 
had developed trade -related capacity building projects jointly with the United Nations Industrial 
Development Organization (UNIDO).  He suggested that the Chairman might consider inviting the 
Director -General designate  of the UNIDO to make a presentation on their programmes, particularly in 
the area of  diversification and assistance in the textiles and clothing sector.  
25. He went on to say that institutions such as the World Bank and the IMF had their own 
features.  It was  clear from the presentations that the programmes of the World Bank and the IMF 
were not adequate to address the scale of assistance required for the LDCs.  For instance, the 
assistance from TIM would be triggered when Members had  shortfalls in their balan ce-of-payments .  
That assistance had been ex -post and after liberalization accomplished through the multilateral 
processes.  He said that taking resources  from such programmes would add to indebtedness.  He was 
encouraged that for some African Members  the IMF might relax conditionality for accessing the TIM.  
He expressed appreciation of the development assistance undertaken by the World Bank.  The World 
Bank 's approach  to increase  export competitiveness included  general infrastructure, utilities and 
regula tory processes.  These were important for general economic growth.  He, however, wondered 
whether th ose measures would enable LDCs to increase exports directly.  The World Bank had 
identified problems of doing business in Bangladesh and had contemplated how to address  it.  That 
was a classic text -book approach.  The private sector in his country did not wait for such assistance.  
He suggested that the World Bank examin e how entrepreneurs from LDCs had been  succeeding and 
what they had been doing right , and thereafter explore how LDCs could build on those.  The textiles 
and clothing sector had not received specific support from the World Bank .  His country had 
diligently followed the prescription by the World Bank to engage within the framework of country 
assistance strategies and poverty reduction strategies to work out projects .  In his country's 197 -page 
long P overty Reduction Strategy Paper (PRSP) , only five and half pages had been devoted to "trade".  
He said that it was unlikely that an item such as "tra de" would be allocated  sufficient funds from the 
PRSP -based development plans.  It was his delegation's experience that assistance for export -oriented 
industries had been difficult to secure  from such processes . 
26. He continued by saying that his Government a s well as the private sector had been trying to 
readjust to the changing environment, following the expiry of the ATC.  He could not derive comfort 
from th e statement  by the World Bank that his country  had been coping well in the first half of the 
year des pite the prognoses that it would be among the most vulnerable  following the termination of 
the ATC .  As analysis showed, there had been  a strong possibility of his country being adversely 
affected.  A closer look at the statistics of his country would have  revealed the adverse impact on the  WT/COMTD/LDC/M/42  
 Page 9 
 
 
sector  of woven garments , which had been a major sector in the clothing  indus try.  He said that his 
country's exports of woven garments to the E uropean Communities  as well as to Canada had been hit 
hard and had dropped d ramatically as compared to last year.  His delegation , therefore,  could not 
afford the luxury of a complacent attitude.  The long -term consequences for many LDCs remained 
cloudy.  Some LDCs had witnessed immediate withdrawal of foreign investors.  Lesotho was a case 
in point.   Therefore, close vigilance was required on the trends in trade in textiles and clothing and in 
understanding what had happen ed in the fiercely competitive marketplace.  He supported the LDC 
Coordinator's suggestion to have a focused  discussion on the section in the n ote which dealt with 
non-reciprocal preference schemes .  He said that the inclusion of textiles and clothing products in the 
preference schemes had been  a recent phenomenon.  The LDCs had just begun to understand these 
preference schemes .  Some  LDCs had started to utiliz e them.  Information was required on whether 
preference schemes had been helping LDCs' textiles and clothing exports to the intended markets.  A 
number of LDCs like his country relied on textiles and clothing  for a higher proportion of exports than 
was the case for other textiles and clothing exporting economies.  He said that text iles and clothing, as 
an export -based industry, had grown in the shadow of guaranteed E uropean and US quotas.  
Overnight his countr y could not become a vertically integrated textiles power h ouse.  Some cushion, 
some trade -related facility w as required for  the LDCs  to overcome their teething problems , and to 
face competition .  It would be useful for his delegation to know the developme nt partners ' thinking 
with respect to assisting the LDCs, particularly t hrough market access in textile  and clothing products.  
He noted that in the past one year there had not been any new market access notifications in favour of 
LDCs in the WTO.  Finally , he expressed appreciation , and reiterated full support , to the Chairman 
for his efforts to examine all aspects of the note.  He hoped that the discussion would lead to a 
beneficial  outcome  for the LDCs.  
27. The representative of Nepal  endorsed the statement made by the delegation of Zambia on 
behalf of the LDCs.  He said that the note by the Secretariat  had emphasized the key role that the 
textiles and clothing sector played in LDCs specially in income, exports and employment generation.  
The sector had had m uch impact over the last two decades because of the quota system.  P reference 
schemes provided to the LDCs  also played a critical role .  The termination  of the ATC  had impact ed 
unevenly among LDCs.  The impact on his country was rather severe for a number of reasons.  His 
country did not have vertical integrati on in the textiles and clothing sector .  The t extile industry was 
non-existent.  Besides heavy dependence on quota, his country's e xports had been less competitive 
because of the land-locked nature of  the economy .  He w elcomed more reflection on the problems of 
quota -dependent, less diversified land locked LDCs in the note.  He said that access to the TIM facility  
by the IMF  was crisis -driven and that the facility was strict in terms of application.  He  urged for TIM 
to be more accessible to the LDCs.  With regard to the presentation by ITC, he said that some of the 
suggestions presented would be difficult to implement.  The t extiles and clothing sector had been a  
competitive sector in South Asia making it difficult to attain vertical integration  in his country  through 
a regional approach .  His country had low tariffs on inputs used in the clothing industry.  He  hoped for 
more support and assistance from the international community and for a more effectiv e preference 
scheme.  As regards the presentation by the World Bank, he welcomed the fact that the  World Bank  
would be  focusing more on trade -related assistance.  H e said that 34 projects in 14 LDCs  totaling 
US$1 billion  had been inadequate  to address the needs of LDCs .  He also said that the US$600 
million  that the LDCs received  out of US$ 18 billion of TRTA and capacity -building, as identified in 
the note , were not sufficient.  He agreed that the pr omotion of the business environment as well as  of 
private sector development would yield positive results.  His country had been doing that.  However, 
because of the low level of economic development, high incidence of poverty and overall vulnerable  
nature of the economy, it had been difficult  to accelerate growt h.  He called for an enhanced and 
sustain ed level of assistance in the trade -related sector s so as to make a positive long-term impact in 
the LDC s' economies  as well as to promote and protect markets for LDC products .  He said that t he 
expiry of the ATC ha d a different impact in different LDCs.  Those countries   that had been suffering 
most from an adverse impact should be given priority in terms of providing adjustment assistance.  
His country would not be able to compete without a strong and comprehensive  support mechanism.  
He urged the IMF, ITC and the World Bank to provide specific assistance considering  particular WT/COMTD/LDC/M/42  
Page 10 
 
 
problems in each  LDC.  The LDCs would require  supportive action s on three fronts:  (i) sustaine d, 
enhanced and immediate assistance from the  World Bank and the IMF as well as from bilateral 
development partners to deal with adverse impacts;  (ii) secure , predictable and comprehensive  
preference schemes to the LDCs with simple rules of origin;  and (iii) a long-term supp ort programme 
to enhance  supply -side capacity of LDCs.  He noted that the Asian LDCs were "underpreferred " as far 
as the preference  schemes for LDCs were concerned.  He said that textiles and clothing had been an 
important sec tor in his country with socio -economic impact.  He requested for continued focus on the 
textiles and clothing sector  to enable LDCs to emerge from adverse  impact s caused by th e termination 
of the ATC .  
28. The representative of China  said that the presentations from the IMF, ITC and the World 
Bank had provided comprehensive  information, which would be useful for LDCs.  She appreciated 
the efforts of these three organizations, which had been dealing with questions regarding the 
competitiveness in the LDCs’ textiles and clothing sector , within their competences and resources .  
Her country had benefited from the policy advice and practical assistance from these three 
organizations.  She noted that the LDCs had not been demanding technical assistance from the ITC 
and encouraged LDCs to seek such assistance.  She shared  the point made by the note as well as by 
the ITC that ther e was great potential for South -South trade.  She noted that most of the LDCs were 
competitive in making garments  and that they did not have an integrated textiles and clothing 
industry .  She point ed out from the presen tation of the ITC that a 10  per cent reduction in the supply 
cost of fabrics and trim ming s would result in 60 per cent increase in a company’s gross profits .  That 
would be so  without increasing sales.  Therefore, a small reduction in  cost could make a big 
difference for companies in the LDCs.  There were good intermediary product suppliers  in developing 
countries  like Pakistan, Thailand and Indonesia and to some extent Bangladesh, which might supply 
fabrics to other developing countri es.  Her country had been  competitive in supplying intermediary 
products but also had been importing a large amount of these products from abroad.   She apprec iated 
the fact that the E uropean Communities  had bee n considering to relax its rules of origin.  She noted  
that the United States would invalidate the AGOA third -country fabric provision  in 2006 .  Th at would 
not be a "liberalizing event ", as coined by the representative of IMF, but might rather restrict trade 
between AGOA -countries and countries not co vered by the AGOA .  She was aware that the ITC had 
been providing business -oriented assistance to its Members , and hoped that it would continue to do 
so.  She regretted  the fact that donors had been  reluctant to finance projects in the textiles and clothin g 
sector.  She encouraged the donors , who were in a position to do so , to provide resources to the ITC to 
carry out work in favour of LDCs.  The World Bank and the ITC had been provid ing concrete 
assistance to the LDCs.  In that regard, there would be succ essful and unsuccessful cases in LDCs  in 
terms of trade and investment .  She requested the World Bank and the ITC to share with Members the 
successful and less successful experi ences of their projects  in LDCs , the reasons for success or for 
failure and how  the LDCs might benefit from practical assistance from them.  She noted the 
observation made by the representative of Nepal that t he impact of the ATC termination in exporting 
countries had varied .  The  impact had also been different for Members  considered  to be adversely 
affected by the termination of the ATC.  She agreed with the point made that the  IMF, ITC and the 
World Bank should extend targeted assistance t o address  specific situations in different Members .  
She then put three questions to these orga nizations.  First, she requested the IMF to provide 
information on what kind of macro problems it had identifed in the LDCs to improve their business 
environment and to improve their competitiveness in the textiles and clothing sector.  Second, she 
asked the ITC whether it had engaged with the enterprises in the assistance recipient countries in 
order to improve the ir activities and had explored what kind of measures should be taken by the 
governments in the area of trade facilitation  or business facilitati on.  She also asked the ITC whether 
it had been look ed into  the area of diversification through product development to help LDCs d evelop 
their economies as over -reliance o n one or two products was not sustainable for any member in the 
long run.  She said t hat there might arise new  opportunities within the textiles and clothing sector as 
its manufacturing  required different products in each of its chains .  Third, she sought information 
from the World Bank on whether there had been a demonstration of concrete  results from its projects 
in improving the business environment or competitiveness of the textiles and clothing sector in LDCs.   WT/COMTD/LDC/M/42  
 Page 11 
 
 
Finally, she shared the sugges tion of inviting UNIDO at a future meeting of the Sub -Committee to 
inform  Members of what kind o f role it could play in helping LDCs increase their competitiveness in 
the textiles and clothing sector.  
29. The representative of the European Communities  recalled  the comments he had made at the 
Sub-Committee's  previous session held in July .  Those had been  reflected in the minutes of that 
meeting.  He said that it had been a challenge for the bilateral donors as well as for the agencies to 
move from analytical and diagnostic work to concrete action on the ground.  The LDCs themselves 
had a key and important  role in terms of identifying their needs, prioritizing them within sectoral 
strategy or country strategy and communicating that to the donor community.  All stakeholders had a 
shared responsibility to respond to the needs of the LDCs.  He appreciated the work of the ITC , in 
particular its support for  regional integration, where relevant, its work on improved material sourcing 
and on sectoral strategies.  The delegation of the EC had been working with the Members of the ACP  
on regional integration.  He note d the lack of demand from the LDCs for assistance from the ITC, and 
underlined the need for LDCs to communiate their needs to the ITC.  He agreed with the point made 
by the representative of the World Bank that the LDCs needed to improve  their business env ironment, 
and needed to undertake measures to make trade policies right a s well as  to improve on trade 
facilitation measures.  He stressed that te chnical assistance and capacity -building had been made 
available  to the LDCs  and benefits might be derived fro m those.  On the question of prefer ential 
access, he said that complete  liberalization of the rules of origin could reduce economic activity and 
might upset sustainable development of the member  concerned.   The rules of origin had been 
designed to promote economic relations and supply chains  in a given economy.  He welcomed the 
opportunity to d iscuss the Everything But Arms (EBA) scheme  and expressed interest to l earn from  
other Members on how they had improv ed preference schemes for LDCs.  In the perspecti ve of the 
Sixth WTO Ministerial Conference, his delegation continue d to hope for a strong commitment by 
Members on that front.  He requested that the chapter on “other means to tackle constraints affecting 
LDC exports” of the note be discussed at a future meeting.  
30. The representative of the United States  requested  to continue the discussion with the IMF, 
ITC and World Bank at the next session .  She requested the I MF to elaborate on how the two 
Members  availing of the T IM had been employing the programme  and what had been  targeted under 
that programme.  She expressed concern that despite availability of ITC’s assistance programmes, the 
LDCs had not been sought its assistance .  She asked ITC how it had been address ed this particular 
problem , and whether the re had been any outreach activity or other approach in that regard.  She 
commended the business report by the World Bank , which provided valuable additional information .  
The primary focus of the World Bank had been the country strategy  at the national level .  She 
wondered whether the World Bank had been doing any work at the regional level.  She noted  that the 
responses in the post -ATC period had not been  homogenous.  The note had not provided enough 
information on the real variations in experiences in differe nt Members .  There had been different 
dynamics operating in the textiles and clothing trade.  Although t otal textile import s in her country  in 
the first half of 2005 had grown in single digit , the i mports from China had grown by 50 per cent.  
Different LDC s had faired differently.  Textile exports f rom Bangladesh, Cambodia and Haiti to her 
country had grown by 20 per cent, 17 per cent and 46 per cent re spectively.  On the other hand, t he 
exports of sub-Saharan African  countries  to the US market had declined  by 9 per cent in the first six 
months of 2005.  There had also been differences in export performances among sub-Saharan 
countries, which her delegation had been trying to assess.  All these trends had implications for policy 
choices.  On the issue of cov erage under the preference schemes, she said that s ince the problem 
dominantly cente red on sub -Saharan African  countries , extending AGOA -like preferences to other 
LDCs would not address the problems faced by the se countries .  In that regard, s he added that  
extending the AGOA -type rules of origin identically to all LDCs would not help the cause of the 
sub-Saharan African countries .  She said that t he markets  of the U S and the E C had been the primary 
target s of many Members.  However, the absor ptive capacity of these markets had been  limited.  It 
would be helpful for major developing countries to reduce import barriers.   LDCs that had been 
producing low value -added textile products  might have some real economies in other markets.  She WT/COMTD/LDC/M/42  
Page 12 
 
 
said that the expiry of t he third -country fabric provision was a fundamental part of the AGOA .  That 
provision was designed  to help the intended beneficiaries build an integrated textiles and clothing 
sector and to make them more competitive.  Finally, s he welcomed the opportunity  to discuss her 
country’s preference schemes  at a future meeting.  
31. The representative of Japan  said that the presentations by the IMF, ITC and the World Bank 
had shown some of the devices that the LDCs could use to improve their competitiveness in the 
textiles and clothing sector .  She supported the suggestion of inviting UNIDO at the next session .  She 
sought explanation from the IMF for the low interest in TIM by the LDCs.  She said that the 
presentation by the ITC responded to some of the concerns express ed by Members in the previous 
session such as the difficulty in obtaining data including market access information.  She found the 
data on developing country markets as well as on material sourcing useful.  She said that  the 
programme entitl ed “Market Acce ss Map”  by the ITC  might help LDCs with more information on 
market access.  She found the example of Cambodia interesting as the World Bank presentation had 
show n that improvement of labour standards had actually attracted international buyers.  Her 
delega tion had made preliminary comments on the note  at the previous session , where it had  
emphasized the importance of shared responsibility by the international community to help the LDCs.  
Her capital had been examining the note and might come back with addit ional c omments on it at the 
next session .  
32. The representative of the IMF shared the concern regarding the lack of integration of trade 
policies into PRSPs in the LDCs.  In that regard, he recalled that PRSPs were country -driven 
documents and , with the assi stance from the World Bank and the IMF, these documents were 
supposed to reflect Members ' policies and priorities.  The integration of trade policy into PRSPs was 
being addressed through the IF process, in particular through DTISs.  The main objective of the IF 
was to mainstream trade policy into development strategies.  The “Aid for Trade” initiative would 
further enhance the IF including in making sure that the trade policy had the right status within the 
broad development strategies.  He said that divers ification was a broad issue and had links with 
macroeconomic policies, business environment and the rule of law  in individual member countries .  
Lack of diversification had partly  been  a result of the distortions of the quota system where Members  
had chose n to specialize in limited export products.  He argued that further concentration of efforts in 
the textiles and clothing sector in the LDCs might contribute to more dependence on the sector .  
Members, therefore , should further reflect on their comparative  advantage s and promote competition.  
He said that the TIM had been targeted to  address specific problems.  That  mechanism was designed 
to address a set of specific issues arising from third country trade liberalization.  It was acknowledged 
that the TIM facility being a loa n would be a problem for highly -indebted countries.  He emphasized 
that most of the Members  that would be interested in TIM would be the eligible PRGF -countries 
which had an interest rate of 0.5 per cent with a repayment period of 15 to 20 years.  Those terms 
represented a concessional lending.  He, however, recognized that accepting new debts would be 
difficult  for some Members .  He further said that TIM was not intended to be used in crisis.  Most of 
the PRGF programmes had been structu ral programmes implemented over a number of years.  Shocks 
relating to the expiry of the ATC should not be a surprise as the Agre ement was negotiated with a 
ten-year phase -out period.  The IMF, through TIM, had tr ied to provide Members  with a breathing 
space and complementary financing in the adjustment process , and had been implementing this 
mechanism outside of  crises.  He said that there was no conditionality with this particular window, 
which would deal with problems relating to balance -of-payments.  Th e coverage of TIM was limited 
to two Members because it had been  designed to address Doha issues, for example, problems relating 
to preferences or problems relating to N et Food -Importing Developing Countries (N FIDCs ).  
Agreements on Doha issues were yet to  come .  The issue arising from the termination of the ATC was 
also not part of the Doha Work Programme.  His delegation was of the view that only a handfu l of 
Members  would face macro economic shocks on accou nt of the expiry of the ATC.  However, the 
shock had not been as dramatic as had been anticipated.    WT/COMTD/LDC/M/42  
 Page 13 
 
 
33. The representative of  the ITC said that besides addressing enterprise -specific problems , ITC  
had also deal t with trade facilitation measures through  projects.  He said that the LDCs could ask 
expertise fr om different agencies , through the IF process,  in dealing with the textiles and clothing 
sector.  The ITC had been working in the area of product diversification at the national level.  It had 
undertak en market analysis, provid ed trade information and len t specific  assistance to Members in 
finding alternative products for exports.  One important product was services.  The ITC had a 
dedicated  section looking into trade in Services.  He shared the view that many LDCs might need to 
move to other sectors in the  long term.  He said that China had attracted a lot  of foreign investment 
and know -how to further develop its textiles and clothing sector.  LDCs might benefit from the 
South -South trade development programme such as from TCDC.  ITC had been working with the 
WTO Secretariat in textiles and clothing related workshops .  However, ITC had size constraints as 
only two persons had deal t with textiles issue in the organization.  He invited Members to the ITC for 
a presentation of the "Market Access Map" .  He said that market access opportunities alone had not 
been sufficient for the LDCs.  The business sector in many LDCs did not have the expertise and skil ls 
to do fabric sourcing, to use e -applications and to do marketing.  In that regard, ITC had been 
providing t echnical assistance to raise skills of business enterprises.  
34. The representative of the World Bank  emphasized the  importance of the  integration of trade 
into the PRSPs, which was a country -driven process.  He said that if a member  had devoted little 
attent ion to trade in  its PRSP, that member itself wou ld need to ask  why that had been  so.  The World 
Bank had focus ed on areas based on its comparative advantage , which included providing policy 
advice, improving business environment, dealing with trade facilit ation and infrastructure -related 
aspects.  These activities sh ould be dealt with at a country -by-country level based on priorities  set by 
a country .  That was why the World Bank did not have a global strategy on textiles and clothing .  The 
World Bank had b een responding to those Members  that had prioritized textiles and clothing sector 
issues in their development strategies.  He underlined that the statistics by the World Bank presented 
at the meeting w ere the most recent statistics.  Those  were aggregate s tatistics.  He acknowledged that 
there mig ht have been some adverse impacts on some sub -segments of a textiles and clothing 
industry.  He said that the private sector in Bangladesh had been coping well .  In its two major 
markets, the textiles and clothing sector of Bangladesh had expanded in the first six months of 2005 
compared to the first six months of last year.  He said that Members  that had labour market 
flexibilities and where the private sector had shown adaptibility would fare better in the adjustm ent 
period.  He noted that many Members  had fared better than expected.  He said that the World Bank 
had many limitations in dealing with regional projects.  The World Bank's  East Africa Trade and 
Transport facilitation project, out of a total of US$140 mi llion financed under IDA, had specifically 
allocated US$62.2 million  for trade facilitation in Uganda, Tanzania, Kenya and Rwanda.  He said 
that for a land -locked country , trade facilitation within the country would not be enough to promote 
trade .  That would also depend on the situation of its neighbours.  Finally, he highlighted the decision 
recently made at the Development Committee  of the IMF and the World Bank , which endorsed the 
proposal for an enhanced IF.  The Development Committee also asked the Wo rld Bank and the IMF 
to further look into  questions of regional or cross -country aid and to look into the possibility of new 
mechanisms to be developed, as appropriate.  That represented  a challenge and his organization would 
respond to it.  
35. The Chairman  thanked the representatives of the IMF, ITC and the World Bank for their 
contributions.  He said that a number of pertinent and important questions had been raised in the 
meeting.  LDCs as well as other Members had asked for continuation of the discussion.  He, therefore, 
suggested that there be a substantive discussion on all elements of the note at the next meeting.  He 
requested the Secretariat to consider preparing a short analytical note for the next meeting based on 
questions and comments from th is meet ing.  He would try to seek the participation of UNIDO  at a 
future meeting of the Sub -Committee .  The Chairman proposed to take note of the presentations by 
the IMF, ITC and the World Bank as well as of the statements made.  
36. It was so agreed . WT/COMTD/LDC/M/42  
Page 14 
 
 
(ii) Accession of LDCs  
- State of Play in the Accessi on Working Parties of the Least -Developed 
Countries  (JOB(05)/180)  
37. The Chairman recalled that accession had been  a standing item of the WTO Work Programme 
for the LDCs.  To facilitate discussion on this item, the Secret ariat had prepared a document , 
circulated as JOB(05)/180.  The document provided a brief state  of play of the ten LDCs that were at 
various stages of their accession process.  He invited the Secretariat to introduce its note.   
38. The representative of the Secretariat  said that periodic notes on this item had been prepared 
by the Secretariat.  In that tradition, the current note was an update, as of mid September  2005,  on 
developments in LDCs ' accession Working Parties.  He said that t he number of LDC s' access ion 
Working Parties had increased.  Working Parties for Afghanistan and Sao Tome and Principe had 
been established recently.  Of the 31 ongoing accession negotiations, ten  were LDCs .  He informed 
Members that Working Party meetings had been held for Bhutan , Cape Verde, Laos, Sudan and 
Yemen in the last 18 months.  Some of these LDCs had had more than one  meeting of their  Working 
Party.  Cape Verde so far  had had three meetings.  He underlined that effort s were being made to 
advance the  accession  of LDCs .  Working party meetings were scheduled for Bhutan and Yemen  on 
3 and 6  October respectively.  A negotiating team of the delegation of Cape Verde would visit Geneva 
in mid October  2005  and might conclude some bilateral meeting s with interested Members.  He sa id 
that there was an ongoing endeavour to activate LDC accessions which were at initial stages and to 
conclude those accessions that were at advanced stage s.  He underscored that the accession process 
required significant efforts from acceding governments.   Technical assistance was critical at all stages 
of the accession process, and even after its conclusion .  Finally, he reiterated  the Secretariat's 
readiness to update Members on the accession of LDCs on a regular basis.  
39. The representative of Zambia , on b ehalf of the LDCs, thanked the Secreta riat for providing 
the state of play on the accession process of the ten  LDC s.  He said that these ten  LDCs were at 
different  stages of acceding to the WTO.  He would appreciate an expeditious consideration of the 
respective  accession processes of these ten  acceding LDCs.  While appreciative of all efforts that had 
been undertaken by Members to ensure an effective integration of all LDCs into the multilateral 
trading system, the LDCs would appreciate a more simplified a nd shorter accession process with less 
stringent concessions.  He looked forward to a speedy acceding process of LDCs based on the 
guidelines on the accession of LDCs adopted by Members in 2002.  He also looked forward to 
significant progress in the negoti ations, particularly in the bilateral market access 
negotiations,  scheduled to take place during next week's Working Party meetings of both Bhutan and 
Yemen.  
40. The representative of Cape Verde  said that his Government had been finalizing a docume nt, 
which i ncluded responses to  the questions and comments received from Members.  The document 
would be available short ly.  His delegation hoped to accede to the WTO as quickly as possible.  In 
this regard, they would continue strengthening the close cooperation wit h the Secretariat.  He 
indicated that a delegation of his capital would be visiting Geneva from 10 to 14  October to hold 
bilateral talks with interested Members.   
41. The Chairman  recalled that the Doha Declaration had recognized that accession of LDCs is a 
priority for the Membership.  The Work Programme for LDCs also attached high importance to the 
issue of accession.  It was important that acceding LDCs receive adequate technical assistance in all 
stages of their accession process.  It was also equally impo rtant that Member states adhere to the 
LDC s' accession  guidelines adopted in December  2002.  He said that all Members should work to 
facilitate and ensure smooth and early accession of LDCs into the WTO, and thereby contribute to 
further strengthening the multilateral trading system.  He proposed that the Sub -Committee take note 
of the document in JOB(05)/180 and of the statements made.    WT/COMTD/LDC/M/42  
 Page 15 
 
 
42. It was so agreed . 
(iii) Trade -Related Technical A ssistance and Capacity -Building  Initiatives for LDCs  
- Integrated Frame work Status Report  
43. The Chairman  recalled that the WTO Work Prog ramme for LDCs mandated the 
Sub-Committee to monitor the implementation of the Integrated Framework.  He invited the 
Chairman of the Integrated Framework Steering Commit tee (IFSC), Ambassador H enrik Ré e Iversen 
(Denmark), to provide a status report on the IF.  
44. The Chairman of the IFSC  said that since his last report to th e Sub -Committee  in March last 
year, the IFSC had met three times and had covered a broad range of areas of the IF Work 
Programm e.  He briefly outlined the main elements that were discussed and important developments 
that had taken place since his last report  with regard to the IF.  
45. He said that the IF had firmly entered a crucial phase of implementation and expansion.  
Sixteen coun tries had so far validated their DTISs, the analytical studies on a country's 
competitiveness.  DTISs of another five LDCs had been nearing completion namely Benin, Chad, 
Lao PDR, Sao Tome and Principe and Tanzania.  Many of these countries had shared with  the 
Members of the IFSC their experiences as regards implementation of the IF.  The IFSC also had had 
the privilege of welcoming the Trade Minister s of Djibouti as well as from Comoros.  The various  
concerns with regard to Window  II of the Integrated Fram ework Trust Fund (IFTF) raised by 
delegations had been taken up by both IF's management bodies  namely   the IFSC and the IFWG.  He 
said that a presentation had been  made to the IFSC on trade facilitation assistance, which was an area 
identified by many LDC s in their DTISs as a priority area in need of assistance.  He said that the IF 
community was continuously learn ing from experiences in the implementation of the IF and was 
employ ing efforts to improve operational aspects when and where needed.  In this re gard, he 
highlighted the IF Simulation Exercise which had taken place in Addis Ababa, Ethiopia  from 7 to 
8 September  2005. The Simulation Exercise was organized by one of the IF donor representatives, the 
US, through the United States Agency for Internatio nal Development (USAID) , with the assistance of 
a consultancy firm.  The Governments of his country, Norway , United Kingdom and the US through 
USAID  had contributed funds  to make the event  possible .  The objective of the Exercise was to 
enable the LDCs to work with the IF agencies, donors and the private sector to reach the full potential 
of the IF.  The Simulation Exercise was attended by representatives from the IF agencies, 
governments and the private sector from LDCs, donors and, as a novelty, by the in ternational private 
sector.  One of the major insights gained from the Simulation Exercise was the importance of 
participation of the private sector, both national and international, in the entire IF process, from its 
very beginning.   
46. He continued by sayi ng that the pledges to the IFTF had grown from US$13.7  million in 2 001 
to US$30.2  million as of 31  May 2005, of which a round  US$20  million had been allocated at the end 
of May  2005 .  The funding projections for 2 005 showed a surplus in Window  I of the IFTF .  
However, Window  II would be running a deficit  leaving a total deficit of a round  US$5 million.  
Appeals had been made to replenish th e IFTF.  He said that the Chair of the IFSC and the  Chair of the 
IFWG had jointly written a letter to donors  in February  2005 seeking more pledges to the IFTF.  He 
was hopeful that more funds would be forthcoming soon .1  He said that improvements had been m ade 
in the operation of Window  II of the IFTF so as to speed up the release of funds to finance projects in 
eligible LDC s.  The approved Terms of Reference for the Local Project Appraisal Committee (LPAC) 
as well as short guidelines to ensure qu ick implementation of Window  II projects had bee n expediting 
approval of Window  II projects.  Thirteen countries had so far submitt ed 33 project proposal s for 
 
1 For new developments see WT/IFSC/M/14.  WT/COMTD/LDC/M/42  
Page 16 
 
 
funding under  Window  II of the IFTF , amounting to US$10.7  million.  Some had started 
implementation.  
47. He said that the synergies between the IF and other international initiatives such as the Joint 
Integrated Technical Assistanc e Programme ( JITAP ) and the Standards and Trade Development 
Facility (STDF) had been growing.  For instance, to encourage synergy with the IF process, the STDF 
had been funding project preparation grants in a number of IF countries including Benin, Cambodi a, 
Djibouti, Guinea, Malawi, Mali, Mozambique, Nepal, Rwanda, Yemen and Zambia.  Moreover, 
project preparation grants and project grants were open to non -IF LDCs.  He recalled that the STDF 
was addressing concerns of LDCs and other developing countries in the area of sanitary and 
phytosanitary (SPS) standards to assist them in gaining or maintaining benefits from market access.  It 
was also noteworthy that partners in the STDF had committed to devote at least 40  per cent of 
resources to projects originating  from LDCs.  He said that the IFSC as well as the IFWG had been 
reflecting on the phase beyond the current IF Work Programme, which  would terminate on 
31 December  2005.  He clarified that it was the IF Work Programme, not the IF as such, which would 
termin ate at the end of the year.  A decision in this regard would need to be taken before the end of 
this year, and this issue might be taken up at the next IFSC meeting scheduled for 26  October  2005 .  
He said that the LDCs had expressed a strong desire to exte nd the IF Work Programme beyond 2005.2 
48. He recalled that the IMF and the World Bank in their spring meetings in Washington in 
April  2005 had stressed the need for "Aid for Trade" and had called for a Geneva -based process to 
prepare proposals for additional assistance to countries to develop their trade.  Th is had further been  
echoed by the G -8 in Gleneagles in July  2005.  Accordingly, the World Bank and the IMF had 
organized a consultation process in Geneva with all key stakeholders , chaired by the Ambassado rs of 
Rwanda and of Sweden.  The outcome of this process was included in the proposal on "Aid for Trade" 
prepared and submitted by the staffs of the IMF and the World Bank to the meeting of the 
Development Committee of the IMF and  the World Bank on 25  September  2005 in Washington.  He 
reported that the Ministers in the Development Committee had endorsed the proposal for an enhanced 
IF including expanding its resources.  Ministers had equally underlined the importance of increased 
aid for trade to address su pply-side constraints and enhance the capacity of developing countries to 
take advantage of expanded trade opportunities.  He noted that the IF had begun to pay off in its role 
to assist LDCs in including a trade component in their National Dev elopment Pla ns and to put 
trade -related assistance on donors' aid agenda.  Finally, he said that in the weeks up to the next 
meeting of the IFSC as well as in the run up to the Hong Kong Ministerial Conference, he would 
explore with Members on how best to implement th e decision of the Development Committee for an 
enhanced IF.  
49. The representative of Zambia , on behalf of the LDCs, thanked the Chairman of the IFSC for 
his detailed and informative report of the work of the IFSC.  He expressed thanks to those partners 
that m ade it possible for Members to participate in the IF Simulation Exercise that was held in 
Addis  Ababa  from 7  to 8 September  2005 .  He underlined the need for the participation of the private 
sector in the on -going process of the IF.  He appreciated the continued goodwill and generosity of 
LDCs' development  partners.  He reiterated that the IF would need to be extended to all LDCs and the 
IF W ork Programme would need  to be extended beyond December  2005 if the main objectives of the 
IF were to be met.  He wel comed the mechanisms that were being explored to enhance the IF through 
initiatives such as  the "Aid for Trade".  He hoped that the  initiative would address supply -side 
constraints of LDCs and would enhance capacities to take advantage of expanded trade op portun ities.  
The package of the "Aid for Trade"  initiative should not be a debt -creating mechanism.  He welcomed 
the endorsement  by the Development Committee of the IMF and the World Bank for an enhanced IF.  
His delegation would like to know exactly  the workability and implementation of the additional 
resources for an enhanced IF.  LDCs would like the "Aid for Trade" initiative to be an enhanced 
engine for addressing their needs  with minimal obligations, for it to be effective and beneficial.  He 
 
2 The IF Work Programme has been extended until 31 December  2006 (WT/IFSC/7/Rev.1).   WT/COMTD/LDC/M/42  
 Page 17 
 
 
also hop ed that an enhanced IF would entail an improved management of the IF.  He looked forward 
to engaging  in deeper discussions on the subject at the next meeting of the IFSC.  
50. The representative of Benin  said that the DTIS of his country  had be en completed.   The 
national validation Workshop would be held  from 13 to 14  October  2005.  He invited the relevant 
agencies to take note of the dates of the Workshop.  He thanked all those who had helped in the IF 
process.  He underscored  that the recommendations that wou ld be adopted during the Workshop 
would  be speedily i ncluded in Benin's  PRSP .  
51. The Chairman  took note of the considerable progress that had been made in the IF process.  
He was also encouraged to see greater synergies between the IF and other programmes su ch as the 
STDF aimed at address ing the concerns of LDCs and other developing countries in the area of SPS 
standards.  He welcomed the endorsement by the Development Committee of the IMF and the World 
Bank of proposals for an enhanced IF including expanding  its resources.  He hoped that with an 
enhanced IF the needs of LDCs would be effectively addressed.  He said that an enhanced "Aid for 
Trade" initiative was an important element to reach an ambitious outcome of DDA.  He echoed the 
words of the WTO Directo r-General that a meaningful "Aid for Trade" package could play an 
important part in helping translate the development potential of the Round into reality.  The 
Director -General had expressed his hope that by the Hong Kong Ministerial Conference, Members 
might reach consensus on a decision to enhance the IF.  He encouraged  Members to reflect on this 
topic in preparation of the next meeting of the IFSC in late October.  He proposed that the 
Sub-Committee take note of the IF status report by the Chairman of th e IFSC as well as of the 
statements made.   
52. It was so agreed . 
C. OTHER BUSINESS  
53. The Chairman  informed Members t hat the next meeting of the Sub -Committee was 
tentatively scheduled for the first quarter of next year.  At that meeting, the Sub -Committee would 
take up the annual review of market access for products originating from LDCs and , as requested by 
Members , would resume consideration of the note contained in document WT/COMTD/LDC/W/37 .  
He said that Members would also have the opportunity to reflect on th e outcome of the Hong Kong 
Ministerial Conference as it relates to the LDCs.  He wished the LDCs all success in their negotiations 
in the run up to the WTO Sixth Ministerial Conference and reiterated his support to the m.  
54. In the absence of any other busine ss, the meeting was adjourned .   
 
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